Friday, January 27, 2006
General Motors Corporation (GM) has posted its first annual loss since 1992. GM reported losing US$4.8 billion in the fourth quarter of 2005 and a total loss of $8.6 billion for the entire year.
GM admitted Thursday night that the loss could swell further as it pays pensions and healthcare costs to thousands of former workers. GM warned that the amount calculated for last year is preliminary and could rise before it is officially reported to the US securities and exchanges commission in March.
The loss was far greater than analysts predicted. Ford, the second of the big three American car manufacturers, beat predictions earlier in the week. In contrast, Toyota is expected to report that it will beat last year’s profit of $11 billion.
GM’s automotive division lost $1.5 billion in the fourth quarter, driven by losses in North America. This has been attributed to GM’s shrinking market share, which has been taken by Japanese manufacturers Toyota and Nissan.
A further $1.3 billion was lost in restructuring charges. As part of the restructure, GM plans to cut 30,000 jobs and close 12 facilities by 2008.
An aide for Kirk Kerkorian, GMs largest individual investor (at 9.9%), has called on the company to halve its $1.1 billion annual dividend, cut executive pay and sell Saab.